Brand Valuation: The Seven Components of Brand Strength

Brand Valuation: The Seven Components of Brand Strength
by: Colin Bates


The Interbrand model of brand strength - part of their valuation methodology - is a useful framework to consider the performance of your own brand.
The Interbrand model of brand strength - part of their valuation methodology - is a useful framework to consider the performance of your own brand. Reflect on these seven points and you should get a better sense of the strength of your own brand, as well as some ideas on how to move forward…

The seven components of brand strength in the Interbrand valuation model are:

Market: 10% of brand strength. Brands in markets where consumer preferences are more enduring would score higher. So for example, a food brand or detergent brand would score higher than a perfume or clothing brand, because these latter categories are more susceptible to the swings of consumer preference.

Stability: 15% of brand strength. Long established brands in any market would normally score higher, because of the depth of loyalty they command. So for example: Rolls Royce would score higher than Lexus.

Leadership: 25% of brand strength. A market leader is more valuable: being a dominant force and having strong market share matters. So for example on this score it is likely that the Coca-Cola brand would out-perform Pepsi on a global basis.

Profit trend: 10% of brand strength. The long-term profit trend of the brand is an important measure of its ability to remain contemporary and relevant to consumers, according to Interbrand.

Support: 10% of brand strength. Brands which receive consistent investment and focused support usually have a much stronger franchise, but the quality of this support is as important as the quantity.

Geographic spread: 25% of brand strength. Brands that have proven international acceptance and appeal are inherently stronger than regional brands or national brands, as they are less susceptible to competitive attack and therefore are more stable assets.

Protection: 5% of brand strength. Securing full protection for the brand under international trademark and copyright law is the final component of brand strength in the Interbrand model.

This model is not perfect, for example several of the components have a built in preference for older brands and so may not give adequate recognition to the value of newer brands such as Amazon or Starbucks.

However, it is certainly useful to reflect on the seven components, and for your own brands ask yourself:

How do my brands currently perform? Does the model suggest any ways in which I could strengthen my brand?

About the Author

BuildingBrands offers practical marketing 'know how' for business owners and managers. Whether you are a one-man start-up, or already running a medium-sized company, BuildingBrands can help you unlock your potential.